A Vauxhall Astra in front of the Ellesmere Port factory, which won the right to make the car over the Bochum plant in Germany in 2012.
Photograph: Paul Ellis/AFP/Getty Images

Vince Cable pushed at the revolving door of General Motors’ New York offices and stepped into the bustle of a February afternoon in Manhattan. As he scanned the street for his awaiting taxi, the then business secretary breathed a huge sigh of relief.

It was 2012, and Cable had just persuaded Dan Akerson, then chief executive of car giant General Motors, to hand production of the seventh-generation Astra to Britain.

Cable’s 11th-hour intervention, along with generous concessions on pay and conditions from the unions, helped save Vauxhall’s Ellesmere Port factory in Cheshire from closure. It also outmanoeuvred Opel, Vauxhall’s German sister, which was desperate to secure the Astra for its ailing Bochum plant.

“The Germans were incandescent,” Cable recalled. “We think they even had [Angela] Merkel on the phone to persuade GM to reverse its decision.”

GM Europe employs more than 38,000 people, with about 19,000 at plants in Germany and 4,500 at Vauxhall’s sites in Ellesmere Port and Luton. The scale of the turnaround task facing Carlos Tavares, chief executive of PSA, is clear. The Vauxhall-Opel operation hasn’t made a profit since 1999 and has made cumulative losses of $20bn since then.

British carmakers are already nervous about their prospects when the country leaves the European Union: tariffs or other trade barriers on British cars exported to the EU could deal a hammer blow to the sector.

Jim Farley, president of Ford Europe, last week insisted that barrier-free trade was essential to protecting his company’s 14,000 British workers. Ford is planning to cut up to 1,100 jobs at its engine plant in Bridgend, south Wales. “For the future of those employees and for customers in the UK, a zero-tariff environment is really, really important,” Farley said.

Britain’s car industry is dominated by continental (Volkswagen and BMW), American (Ford and GM) and Japanese (Nissan and Toyota) manufacturing groups whose main export market is the EU. Eight out of every 10 cars that roll off British production lines are exported and the EU is the biggest export market, with 56% of British-made cars sent there.

Car manufacturing in Britain is close to a record high, with 1.72 million made on these shores in 2016: not far off the peak of 1.92 million in 1972. Consequently, the sector is a key player in the British economy. Figures from the Society of Motor Manufacturers and Traders show the UK car industry clocks up annual turnover of £71bn, employs 169,000 people directly and supports a further 814,000 indirectly.

But new trade barriers are also likely to make it more expensive for British manufacturers to import components. If costs go up, it may give PSA an easy excuse to shut its newly acquired British factories. On the flip side, cars made in Britain are likely to be cheaper for UK buyers than those from Germany, Spain or Italy, and if the government can strike trade deals with nations outside Europe, PSA’s UK factories could tap into those markets.

Tavares hinted at this, noting the “potential opportunity” that a hard Brexit might present “to have inside of the UK some manufacturing plants”.

This may still mean slimming down operations until enough trade deals with other countries are inked in.

The tie-up makes PSA, owner of the Peugeot and Citroën marques, the second-biggest European carmaker – accelerating past Renault, but behind VW – with a 16% market share.

Tavares has a reputation as a cost-cutter, and PSA, which is 14% owned by the French state, estimates savings and other benefits from the deal should reach €1.7bn on an annual basis.

It said most of this would come from “synergies” – eliminating duplication in head-office functions such as marketing. However, analysts reckon there are sure to be large-scale job cuts, and even plant closures.

Ferdinand Dudenhöffer, who leads the Centre for Automotive Research (CAR) at the University of Duisburg-Essen, estimated 6,250 job cuts are required to achieve the necessary savings in production. “The shuttering of entire plants is therefore not excluded,” he says.

Tavares has pledged to honour GM’s current contracts, which guarantee production of the Astra at Ellesmere Port until 2021, and the Vivaro van in Luton until 2025. That gives British workers some assurance about their jobs in the short term.

But unions reckon talks about a new model to replace the Astra will start again some time next year. And unlike 2012, ministers and union bosses are likely to have less bargaining power in these negotiations.

This time around, the already powerful French and German interests will be in the driver’s seat. Factories inside the EU are sure to target Brexit and the tariff advantage their plants are likely to have over British rivals.

Cable is gloomy about the prospect of outfoxing Opel this time. “Of course, we didn’t have to deal with Brexit, which has thrown a huge spanner in the works this time around,” he says. “It probably makes it more difficult.

“German pressure is going to be huge. When we were negotiating for Ellesmere Port, there were people pushing from the German side because they didn’t want Bochum to lose out. This time around it will be much more intense.” Pointing to Brexit, the Opel brand’s dominance overseas and the French government’s shareholding in PSA, he repeats: “All these factors make it a lot more difficult.”

Tavares has already sent tremors through Westminster after signalling that he wants to create a “European automobile champion with German-French roots”.

It doesn’t bode well for Vauxhall, which has been building cars in Britain since 1903 and was bought by GM in 1925.

Trades unions don’t want to leave anything to chance. “The uncertainty caused by Brexit is harming the UK auto sector,” says Len McCluskey, general secretary of Unite. “We need every assistance from the government to give this sector a fighting chance.”